Judge: Michael Avenatti must pay $4.85M in ex-lawyer's suit

Amanda Lee Myers And Michael Balsamo, The Associated Press, at 19:10 on October 22, 2018

LOS ANGELES - Porn actress Stormy Daniels' lawyer Michael Avenatti must pay $4.85 million to an attorney who worked at his former law firm, a California judge ruled Monday in an order that holds the potential presidential candidate personally liable in a lawsuit over back pay.

The Los Angeles judge ordered the payout the same day a separate ruling came down evicting Eagan Avenatti LLC from its office space in Southern California after four months of unpaid rent.

In the case over back pay, Los Angeles Superior Court Judge Dennis Landin ruled that Avenatti personally guaranteed a settlement with attorney Jason Frank, who said Eagan Avenatti misstated its profits and that he was owed millions of dollars.

Avenatti, who is best known for representing Daniels in her lawsuit against President Donald Trump following an alleged 2006 affair, did not appear at Monday's hearing and never filed arguments in the case.

He told The Associated Press that Frank owes him and the firm $12 million "for his fraud." He did not provide details and declined to comment further. It's unclear whether Avenatti has filed any litigation in the matter against Frank, whose attorney said Frank doesn't owe Avenatti a dime and that saying so is defamatory.

Avenatti, who is toying with a possible 2020 presidential run, can appeal the ruling but since he never filed arguments about why he shouldn't have to pay the $4.85 million, any such effort would be "dead in the water," said Frank's attorney, Eric George.

"He's managed to delay this for ages," George said. "At the end of the day, this is money that's owed. No matter how you try to spin it, it comes back to the fact that he took money, it wasn't his and now there's a judgment saying it's owed to my client."

Frank had worked at Avenatti's former firm under an independent contractor agreement and was supposed to collect 25 per cent of its annual profits, along with 20 per cent of fees his clients paid, court documents say.

"It'll be important to keep an eye on him and sources of money that are coming in, see what his assets are, and take it from there," George said.

Meanwhile, Orange County Superior Court Judge Robert Moss issued an order Monday terminating Eagan Avenatti's lease from office space in Newport Beach and ordering the law firm to pay $154,000 for four months of back rent. No one appeared in court on behalf of the firm.

Monday's developments came five months after a U.S. bankruptcy court judge ordered the firm to pay Frank $10 million. The $4.85 million for which Avenatti is now personally liable is in addition to that judgment.

In July, the Justice Department accused Avenatti of making misrepresentations in the bankruptcy case and said his former law firm owed more than $440,000 in unpaid federal taxes.

Avenatti's lawyer said at the time that the matter had been resolved. The Justice Department insisted that settlement negotiations were continuing but the debt was still owed.

The ruling against Avenatti comes a week after a federal judge dismissed Daniels' defamation lawsuit against Trump, saying the president made a "hyperbolic statement" against a political adversary when he tweeted about a composite sketch that Avenatti has released.

Daniels, whose real name is Stephanie Clifford, sued Trump in April after he said a composite sketch of a man she said threatened her in 2011 to keep quiet about an alleged affair was a "con job." Avenatti has appealed the ruling.

The defamation claim is separate from another lawsuit that Daniels filed against Trump, which is ongoing. Daniels was paid $130,000 as part of a nondisclosure agreement signed days before the 2016 election and is suing to dissolve that contract.